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The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

nytimes.com

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Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#91

Post by deafcalculus »

lewis500 wrote: post #71

It’s inaccurate to say that we “can’t” escape it. The federal reserve has been raising interest rates to slow inflation and growth in employment, and for years they have paid interest on bank reserves at the fed and constantly talked up plans to unwind their portfolio (selling off assets). If they had done less of all that we would have higher inflation. Same is true of some other central banks. I always am frustrate…

If the central banks sold off all the bonds they bought with QE, that'd cause deflation, not inflation. In fact, the japanese central bank is printing money and buying up ETFs. It's too soon to say if this is a success, but thus far, hardly any inflation!

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#92

Post by zozbot123 »

FranzFerdiNaN wrote: post #89
zozbot123 wrote: post #62

Earlier quoted context omitted.

Somewhat counter-intuitively, a low unemployment rate is a lot more important to workers' overall incomes than a rise in wages (given typical variation in both). This is also why high real wages are so damaging when they lead to higher involuntary unemployment: they actively rob those who are most in need of their rightful incomes! It's why recessions make people angry and anxious for "something to be done", whatever…

amazing how you put the blame on workers for unemployment instead of on corporations being greedy vampires sucking the life out of everything in the pursuit of ever more shareholder value.

I don't blame workers for unemployment. If anything, corporations are to blame for not being willing to hire workers at lower real wages, or perhaps with worse working conditions (e.g. increased monitoring and micromanagement) when involuntary unemployment is high. (To be clear, this happens for entirely self-serving reasons, like the concern that hiring someone at lower pay would ruin "morale" within the firm. No one sane thinks that hiring unemployed workers is bad for them, and worse than the alternative of leaving them without work!)

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#93

Post by mosiuerbarso »

killjoywashere wrote: post #47
Spooky23 wrote: post #37

Earlier quoted context omitted.

Seriously. My family is relatively well off and our home was purchased back in 2004. Still, the steady march of expenses has certainly increased faster than income.

On a micro note, give YNAB a try. Diligent measurement has impressed on me how unconstrained our spending was. Cutting down the number of channels for payment goes a long way. There's a reason all the FAANG companies are happy to handle your credit cards.

+1 on this. I was terrible with money till I started using it a few years ago. I was one of those people with a good job but nothing to show for it. Using YNAB made me realize i was frittering most of my money away on lots of little purchases here and there. YNAB enabled me to see this and I drastically altered my spending. Also, a few years ago I had to take over my fathers business. Subsequently, this involved me having to take a substantial pay cut. I wouldn't have been able to do this without YNAB and budgeting.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#94

Post by peterwwillis »

I can see the appeal of being a Doomsday prepper now. Having your livelihood held hostage to fiscal policies of random nations feels a bit like an ant being played with by a bored child. You might as well gain some agency by stocking cans of beans and vitamin supplements in a concrete bunker.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#95

Post by defertoreptar »

jlarocco wrote: post #90
defertoreptar wrote: post #87

Earlier quoted context omitted.

Growing the middle class raises the Lorenz curve in the center. That, in turn, lowers the GINI coefficient.

It can lower the GINI, but it hasn't been. GINI's been increasing for decades, and was still increasing as of 2016: https://fred.stlouisfed.org/series/SIPOVGINIUSA

That is interesting that the GINI didn't inflex with the middle class in 2016. It would be good to see more data. Apparently the World Bank doesn't compute it too often.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#96

Post by Spooky23 »

killjoywashere wrote: post #47
Spooky23 wrote: post #37

Earlier quoted context omitted.

Seriously. My family is relatively well off and our home was purchased back in 2004. Still, the steady march of expenses has certainly increased faster than income.

On a micro note, give YNAB a try. Diligent measurement has impressed on me how unconstrained our spending was. Cutting down the number of channels for payment goes a long way. There's a reason all the FAANG companies are happy to handle your credit cards.

I agree this is great advice!

For me the biggest things are that as the family grows, so has many expenses. We need two big cars now, which are like 150% more than they were in the early 2000s. For health reasons we need to really focus on fresh vegetables and meats and avoid most cheaper foods — which are very volitile price wise.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#97

Post by TomMckenny »

defertoreptar wrote: post #95
jlarocco wrote: post #90

Earlier quoted context omitted.

It can lower the GINI, but it hasn't been. GINI's been increasing for decades, and was still increasing as of 2016: https://fred.stlouisfed.org/series/SIPOVGINIUSA

That is interesting that the GINI didn't inflex with the middle class in 2016. It would be good to see more data. Apparently the World Bank doesn't compute it too often.

If wages increases are less than GDP growth rate, the GNI must rise. The situation for the last 40 or so years.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#98

Post by deafcalculus »

Animats wrote: post #73

As is typical of such articles, this is written from the point of view of a central bank. Low inflation is only a problem to central banks. Central bankers are bothered by low inflation because they can't cut interest rates below zero. The US and Europe inject money into the economy by having the central banks loan it out to commercial banks, who then loan it out at a profit. That's not the only way to do things. Jap…

Capitalism seems to be capable of producing far more than it can consume.

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#99

Post by Animats »

deafcalculus wrote: post #98
Animats wrote: post #73

As is typical of such articles, this is written from the point of view of a central bank. Low inflation is only a problem to central banks. Central bankers are bothered by low inflation because they can't cut interest rates below zero. The US and Europe inject money into the economy by having the central banks loan it out to commercial banks, who then loan it out at a profit. That's not the only way to do things. Jap…

Capitalism seems to be capable of producing far more than it can consume.

Production technology today is capable of producing far more than can be consumed. This is a change from most of history, and it's why classical economics doesn't have the answers.

Capitalism is now market limited. There has to be buying power. People who are only marginal players in the economic system don't generate much discretionary buying power. As the CEO of WalMart has said, "Our customers are out of money".

Re: The World Economy Just Can’t Escape Its Low-Growth, Low-Inflation Rut

#100

Post by defertoreptar »

TomMckenny wrote: post #97
defertoreptar wrote: post #95

Earlier quoted context omitted.

That is interesting that the GINI didn't inflex with the middle class in 2016. It would be good to see more data. Apparently the World Bank doesn't compute it too often.

If wages increases are less than GDP growth rate, the GNI must rise. The situation for the last 40 or so years.

The middle class income earners tend to have retirement accounts, don't they?
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